Sareb Decision Could ‘Change the Direction of the Market’

Spain’s bad bank, Sareb, is in the final stages of selecting new operators to manage its €50 billion in property assets, a decision that could “change the direction of the market,” according to a bank director.

Sareb hopes to narrow the choices to three or four asset managers with “the greatest capacity to manage our assets in a professional and efficient way,” Sareb Director Jaime Echegoyen told reporters. A decision on an asset manager for the portfolio, dubbed “Ibero,” could be made by the end of September or early October, he said.

While saying the decision could “change the direction of the market” might be a bit of hyperbole, there is no doubt the decision could have a far-ranging impact on the market. A portfolio this big would give a real estate management and sales platform a dominant position in the market, as well as the ability to set pricing levels and dramatically reduce the supply of homes available for sale. The glut of supply has been dwindling in recent months, but still remains at more than 650,000 homes, according to a recent report.

But the new portfolio manager will face stiff competition. The assets in the portfolio, including developer loans and foreclosed properties, are currently managed by the real estate platforms, or servicers, of the nine failed banks that were nationalised during the most acute phase of the crisis. (Their management contracts expire in December.)

In the last two years, big U.S. funds have taken over almost all the banks’ real estate servicers. Apollo bought Altamira from Santander, Värde Partners & Kennedy Wilson bought Aliseda from Banco Popular, Blackstone bought CXI from Catalunya Caixa, TPG bought ServiHabitat from CaixaBank, Cerberus bought Bankia Habitat from Bankia, Centerbridge bought Aktua from Banesto, and Haya Real Estate bought Cimenta2 from Cajamar. “This is now a crowded space,” says Mark Stucklin from SPI. “A lot of foreign funds have jumped onto the same strategy, and I doubt they can all succeed.”

Control of the Sareb fund will provide a strong competitive advantage to any asset manager. But there are still questions about the quality of the property in the Sareb portfolio and its saleability.

“Getting hold of the Sareb portfolio could be a big advantage,” Stucklin says. “That said, I sometimes wonder how much garbage there is in these portfolios, so it could be a mixed blessing.”

The list of bidders for the portfolio include Aktua, Altamira, Anticipa, Servihabitat, CEISS, Haya, Novagalicia, and Solvia, industry insiders told El Mundo. With the current contracts due to expire, now is the time to name a manager for the portfolio, Echegoyen said.

“We are the appropriate moment to do it, because professional and specialised operators have entered the market who two years ago practically didn’t exist in Spain,” he said.

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